Labour: social care reforms will not stimulate insurance market
Yesterday, health secretary Jeremy Hunt introduced a programme of reforms including a £75,000 cap on care costs and a means-test threshold of £123,000.
This will be funded by National Insurance contributions released by the end of the state pension contracting out regime and freezing the inheritance tax threshold at £325,000.
Hunt said with costs capped at £75,000 it would be easier for individuals to plan and obtain insurance. He claimed insurers and financial services would make products available as a result of this certainty.
He added: “Just as people make provision for their pensions, so we also need to be a country where people prepare for their social care as well. There will be a wider range of financial products becoming available in the market.”
However, shadow health secretary Andy Burnham questioned how an insurance market would develop. He pointed out that the Association of British Insurers had previously said a pre-funded insurance market would not be realistic.
Barbara Keeley, a Labour MP and advocate for social care described a response from the insurance market as “wishful thinking of the highest order.” She questioned how the UK could have a resurgence of pre-funded insurance products when it doesn’t exist elsewhere.
Meanwhile, Danny Cox of Hargreaves Lansdown said it was highly unlikely insurance companies would re-create pre-funded long term care insurance schemes after their fingers were burnt the last time they tried them.